Wellard offers premium priced forward contracts for bull calves

Australia’s largest live cattle exporter Wellard is offering forward contracts and a price premium to producers of European and British breed cattle to keep their bull calves entire.

The move to source large numbers of bull calves for export to the Middle East and Europe is driven by consumer demand for bulls in those markets, and in particular the leaner meat bulls produce compared to steers.

“Buyers in those countries are prepared to pay a significant premium to reward producers who are prepared to leave their bulls uncastrated,” said Wellard Chief Operating Officer Scot Braithwaite.

In addition to the price premium, bull calves have higher growth rates and average daily gains compared to steer calves, providing additional benefits to cattle producers.

“We believe the ability to produce extra kilograms of beef at a premium price with a guaranteed price and market is worthy of serious consideration by cattle breeders,” Mr Braithwaite said.

By way of example, a 265 kilogram steer at 300c/kg will return producers $795 a head. A faster growing 300kg bull at 325c/kg will return $975 a head.

Wellard recognises the two biggest concerns by producers who leave their bulls entire are management and infrastructure associated with more active cattle and avoiding being hit with discounts from local processors if their bulls aren’t bought for live export.

To counter the issue of management and potential discount from local processors, Wellard will buy and take delivery of the bulls before they reach 300 kilograms liveweight.

The forward contracts, to be signed after birth so numbers are assured, removes the price and delivery risk.

Both set-priced contracts and market price plus a premium (MP + $$) contracts will be offered by Wellard.

“We are happy to talk to agents and producers about when they would be looking to turn off their bull calves and which type of forward contract has the most appeal to them,” Mr Braithwaite said.

“Some producers will be happy to lock in a price they know is profitable, regardless of whether the saleyard price moves up or down. Other producers want exposure to future price rises in the cattle price, and we can accommodate that as well.”

Bull orders in both northern and Western Australia already attract a 20-30c/kg premium over steers as bulls are keenly sought after in Indonesia, Vietnam, the Middle East and Europe.

“More northern cattle producers are choosing to keep their male calves as bulls, turn them off earlier and as a result can run more cattle as opposed to keeping and growing out their steers,” Mr Braithwaite said.

“It also removes some of the seasonal risk as getting a bull calf to 250-300kg is more straightforward in a difficult season than trying to get a bullock to 600kg plus over a longer timeframe.”